House panel OKs bill slapping 5% franchise tax, 25% income tax on POGOs
MANILA, Philippines – The House committee on ways and means approved the bill that would impose new taxes on the revenues generated by Philippine offshore gaming operators (POGOs) and their service providers.
On Monday, November 18, the panel unanimously approved House Bill (HB) No. 5267, penned by the committee chairperson, Albay 2nd District Representative Joey Salceda. The measure will now have to be sponsored for 2nd reading approval in the plenary.
If passed into law, HB No. 5267 would require POGOs to pay a 5% tax on gross receipts from their operations covered by the law granting their franchise.
Foreign employees working for POGOs who earn a minimum annual salary of P600,000 would also have to pay an additional 25% tax on their salaries, wages, annuities, compensation, remuneration, honoraria, and allowances.
Salceda said the additional taxes would raise P45 billion for the national government. (WATCH: EXPLAINER: How online casinos hit the jackpot in the Philippines)
"The committee on ways and means has already approved the tax on POGO. It's essentially just, actually just tweaking PD (Presidential Decree) 1869 that the 5% franchise tax should be directly imposed on them," Salceda told reporters after the hearing.
Under HB No. 5267, the Philippine Amusement and Gaming Corporation (Pagcor) would be tasked to collect the taxes and remit these to the Bureau of Internal Revenue (BIR).
Finance Secretary Carlos Dominguez III backs the bill. But Solicitor General Jose Calida argued that the Philippine government cannot tax POGOs.
The Philippine Star reported that Calida, in an opinion submitted to Pagcor and the BIR, said POGOs earn from bets placed by registered foreign subscribers.
"Ultimately, an offshore-based operator's income is the placement of bets on its online betting facility – which are derived from sources without (outside) the Philippines," said Calida.
The recent years saw the rise of the online gambling industry in the Philippines, but Chinese nationals have been accused of using POGOs as fronts for money laundering. (READ: A Chinese online gambling worker's plight in Manila)
China earlier urged the Philippines to halt all online gambling operations, after linking the industry to crimes such as money laundering, kidnapping, and extortion. – Rappler.com